How General Motors Is Raising the Bar in Family Sedans

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Bebeto Matthews/APGM unveiled the all-new 2016 Chevrolet Malibu earlier this month. It goes on sale this fall.
For years, many Americans in search of a reliable family sedan felt no need to look further than the Toyota Camry or Honda Accord. The Japanese stalwarts offered safe, comfortable cars at good prices -- with reliability records that competitors couldn't match.

That has changed. Now, the Camry and the Accord face stiff competition -- not because Toyota (TM) and Honda (HMC) have dropped the ball, but because competitors' reliability ratings have improved -- and all have raised their games.

The latest competitor to step up big is General Motors (GM). Believe it or not, GM's new-for-2016 Chevrolet Malibu could raise the bar for the whole segment -- and make America's best-selling category of cars even better.

An All-New, Very Different and Much Better Chevy Malibu for 2016

What's new about the 2016 Malibu? Compared to its predecessor, just about everything.

GM says the new Malibu is built on an all-new "architecture," or structure, that will be shared with other GM vehicles in time. That new architecture gives the new Malibu a longer wheelbase, which translates into (much) more legroom in the back seat. It's also lighter by about 300 pounds, which should make the new Malibu both more fuel-efficient and more fun to drive.

Gone is the bland rental-car exterior, replaced by a striking new body with a family resemblance to the Malibu's bigger brother, the handsome Chevy Impala. Inside, the new Malibu's interior is a lot nicer, with high-quality materials and styling touches that might make it best-in-class -- and that roomier back seat, which now has ample headroom for a 6-foot-tall adult. Under the hood, there's a choice of two gasoline engines, including an all-new 1.5-liter turbo four-cylinder with a "stop/start" system that saves fuel.

There's also a brand-new hybrid version. Aside from the innovative plug-in Chevy Volt, GM has been late to the hybrid party, but it has made up for that with the new Malibu. The 2016 Malibu Hybrid uses a variant of the system developed for the all-new Volt. GM promises an EPA combined fuel-economy rating of at least 47 mpg, better than many rivals.

All of these improvements should add up to a hit. The outgoing Malibu has been an also-ran, with sales far behind the class leaders. But the new Malibu looks set to jump to the head of the segment ... at least until rivals respond.

The New Malibu Could Have an Impact Like Ford's Fusion Did a Few Years Ago

In a way, this story started a few years ago, when Ford's (F) redesigned Fusion made a big splash. Unlike the Camry and Accord, the Fusion featured striking, dramatic styling and an interior that felt much more premium than those in the Japanese mainstays. It instantly put the Malibu and other rivals a big step behind.

There was more. Some of the Fusion's engineering had been done by a Ford team in Germany, and they gave the Fusion a "German" feel. None of these cars are speed demons, but the Fusion feels taut and precise on-road in a way that's reminiscent of German luxury sport sedans, and different from a Camry.

The Fusion is a bit more expensive than an Accord or Camry, but Ford felt that its Fusion was a nicer car. Ford's formula worked: Fusion sales rose significantly, and Ford's profits grew.

But these are among America's best-selling cars, and the competition moves quickly: Ford's advantage faded as a fresh new Accord (with an improved interior and more rear-seat room than the Fusion) and an overhauled Camry (with sharper styling) arrived at U.S. dealers. And Nissan jumped into the fray with an upgraded Altima that offered many amenities at an attractive price.

Now, GM will try to raise the segment's bar again with its new Malibu, which will arrive at U.S. Chevrolet dealers this fall. GM hopes that its sales and profits will rise as a result, and they probably will. But it's a safe bet that its rivals will move quickly to make further improvements in their cars -- and car-shoppers will be the real winners.

John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.
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